Where am I ?? …… What am I aiming at ??

June 15, 2013

Answer: Trying to get re-invested in the Vanguard Exchange Traded Fund ” VTI” ( which is ” SPY ” expanded from 500 USA equities to 3,300 USA equities ) and to be in sync with VTI’s 200 day moving average trigger.

If you have been following my posts, you know that I’ve cashed out to take profits . Now, I need to find my way back into the market at a price point where I don’t get sucked under water if VTI violates its 200 day moving average support level (8.7% below where we are now ). I’m only 25% invested, and each alternate month end I intend to invest more until I am 100% invested.

This ” in sync” process could take a few months unless VTI suddenly dives below its 200 day moving average one month end, and, just as suddenly, re-emerges above its 200 at a month end….soon. At that point I’d go ” all in ” and finally be in step with the program.

I have done back tests ( via a subscription to “ETF Replay” ) which demonstrate the 200 day moving average month end strategy has been superior to ” buy and hold “ since the year 2000 with 5 wins and no losses and a gain of about 200% while the ” buy and hold ” methodology delivered only 136 percent ( and no profit whatsoever if you simply held for the 10 year period from January 3, 2000 to January 5, 2010 ). If that 10 year round trip to nowhere isn’t bad enough, during the period October 9, 2007 to March 9, 2009 ” the market “, as represented by the ETF ( ” SPY ” ) dropped by 56%.

Could you have stomached that kind of grinding, 18 month, drawdown ? Or, would you have given in to fear and left 56% on the table.? Remember, on March 9, 2009 the prevailing sentiment was ” lookout below ! ” Nobody was ringing a gong announcing we were at a market bottom. Think your emotions could have overcome that ? Definitely not a happy day for procrastinators or emotionally driven individuals who frequently buy at the top and sell at the bottom. ! Definitely not my way of making a living ! The 200 day moving average / month end strategy would have totally side stepped all that anxiety ! Of course, I’m not saying it will sidestep with the same degree of success in the future, but I like to learn from history, and I like my chances.

As of now, I’m content that I’m only 25% invested. That contented feeling could change next week if the market rises and I give up potential profit. But I can accept that. Its that 8.7% dive ($87,000 per $ million ) to the 200 day line that would give me a queasy, high anxiety, I’m going to wipe out, type feeling. I’ll pass on that ! Instead, I’ll just continue to leisurely paddle out to deeper and deeper water…. knowing that ” Go Away May” could still rear its ugly head above the waves , while the normally expected November – ” Risk On ” rollers are still far beyond my line of sight, and over the horizon.